Intellectual Property and Technology News

OIL STATES ENERGY SERVICES, LLC V. GREENE'S ENERGY GROUP, LLC

PATENT – Argument: November 27, 2017

Issue: Whether inter partes review before the PTAB violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury trial.

The America Invents Act created the inter partes review (IPR) process, whereby a third party may request review of any patent by the PTAB. If the USPTO determines "there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged," the petition may be instituted, and a three-judge panel may issue a final written decision on the validity of some or all of the challenged claims.

ISSUE: Whether inter partes review before the PTAB violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury trial.

At argument, Oil States contended the IPR process is unconstitutional because it allows the PTAB to exercise judicial power in disputes over private rights between private parties without Article III supervision and consent, departing from 400 years of precedent. Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan suggested the PTO should be allowed to correct a mistake made in issuing a patent. Justice Anthony Kennedy asked whether Congress may condition a patent grant on agreement to the IPR procedure.

Greene’s Energy argued IPRs are constitutional because (a) they reexamine patents in a manner entrusted to the Executive by Congress since 1790, which is not inherently judicial; (b) they do not extinguish private property rights because the patent should not have issued in the first place; and (c) IPRs satisfy Supreme Court precedent for deciding a public right. Justice Breyer questioned the propriety of a system wherein a patent owner could hold a patent for 10 years and invest billions in the technology, only to have it invalidated. Chief Justice John Roberts asked whether the patent system is simply one where the patent owner must take the bitter (potential IPR) with the sweet (patent rights).

For more on Oil States, see our Q3 2017 commentary.

SECURE AXCESS, LLC V. PNC BANK NATIONAL ASSOCIATION

PATENT – Cert. Pending

UNWIRED PLANET, LLC V. GOOGLE INC.

PATENT – Cert. Pending

ISSUE:The proper scope for covered business method reviews.

The America Invents Act created the covered business method (CBM) review process, allowing challenges to the validity of any patent that claims "a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions." § 18(d)(1). The USPTO has interpreted this language broadly.

In two separate appeals, petitioners seek guidance on the proper test for whether a patent is a "business method." In Secure Axcess, LLC v. PNC Bank Nat'l Ass'n, the federal circuit held the PTO should rely on the statutory definition of "business method" in § 18(d)(1) when determining whether a patent is eligible for CBM review, reasoning this definition necessarily includes a "financial activity element," but is not determined by non-statutory phrases or standards. Petitioner PNC Bank argues the federal circuit erred by requiring a "financial activity element," which is contrary to the plain language of the statute and the legislative history, and eviscerates CBM review. Respondent Secure Axcess contends the federal circuit's decision corrected the PTAB's overly broad interpretation of the CBM statute.

In Unwired Planet, LLC v. Google Inc., the federal circuit held the PTAB erred by broadening the statutory language to include methods "incidental to" or "complementary to" a financial activity. Google argues the federal circuit lacks jurisdiction to review the PTAB's determination that a patent is a covered business method, but, if it does possess jurisdiction, the federal circuit should extend deference to the PTAB's broader interpretation. Unwired Planet argues the federal circuit has jurisdiction to review the PTAB's CBM definition and the PTAB should rely on statutory language in determining whether a patent is a covered business method.

SAS INSTITUTE INC. V. MATAL

PATENT – Argument: November 27, 2017

ISSUE: Whether the PTAB must issue a final written decision on every claim challenged by petitioners.

Section 318(a) of the America Invents Act states if an IPR is instituted, "the [PTAB] shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner." SAS Institute filed an IPR petition challenging all 16 claims of a patent; the PTAB instituted review on and issued a final written decision regarding 9 of the claims.

ISSUE: Whether the PTAB must issue a final written decision on every claim challenged by petitioners.

At argument, SAS argued the plain language of the statute confirms a partial decision is inappropriate. Justice Stephen Breyer noted that the language of the statute favors the petitioner, but commented there is ambiguity in the statute that could justify the practical approach argued by the respondent. Justice Sotomayor questioned whether the petitioner was seeking an avenue to appeal IPR institution decisions, which she deemed an attempt to avoid the Court's Cuozzo decision (holding PTAB's institution decisions are unappealable). The respondents argued the statutory scheme granted the PTAB discretion to partially institute IPRs. Chief Justice Roberts and Justices Samuel Alito and Neil Gorsuch focused on the plain language of the statute, which they noted favored the petitioner.

For more on SAS Institute, see our Q2 2017 commentary.